lean services

transition
lean tools
building blocks
supporting goals
introduction
AND
JUST IN TIME

LEAN OPERATIONS
 LEAN OPERATIONS
A flexible system of operation that uses
considerably less resources than a

supporting goals
traditional system
building blocks
lean services

introduction
lean tools

• Greater productivity
transition

• Lower costs
• Shorter cycle time
• Higher quality

JUST IN TIME
A highly coordinated processing system
in which goods move through the system,
and services are performed, just as they
are needed
Just
in
Time
JIT and Competitive Advantage
CHARACTERISTICS OF LEAN
OPERATIONS
Waste Reduction Visual Controls

Continuous High Quality

Improvement

Use of teams Work Cells

 CHARACTERISTICS OF LEAN
OPERATIONS

Minimal Inventory Lean Culture Small Lot Sizes

Output only to
Quick Changeovers
match demand
 BENEFITS RISKS

Reduced waste Increased stress on workers

Lower costs Fewer resources
Increased quality Supply chain disruptions can
Reduced cycle time halt operations
Increased flexibility
Increased productivity
THE TOYOTA APPROACH
(Toyota Production System)

Muda Heijunka
waste and inefficiency leveling workload

Kanban Kaizen
manual system continuous improvement

Jidoka
autonomation
OVERVIEW OF
GOALS AND
BUILDING BLOCKS
OF LEAN
PRODUCTION
SYSTEM
 ULTIMATE GOAL OF LEAN
• balanced system
achieves a smooth, rapid flow of materials

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lean services

through the system

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SUPPORTING GOALS
1. Eliminate disruptions
2. Make the system flexible
3. Eliminate waste, especially excess
inventory
SOURCES OF
WASTE
 lean services
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supporting goals
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 supporting goals
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1. Standard parts
lean services

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lean tools

2. Modular design
transition

3. Highly capable
production systems
4. Concurrent
engineering
STANDARD PARTS
• workers have fewer parts to deal with

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• standard processing

MODULAR DESIGN
• greatly reduces the number of parts to deal with
• simplifying assembly, purchasing, handling, training
HIGHLY CAPABLE PRODUCTION SYSTEM

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• Quality is the sine qua non (“without which not”)
of lean

• Quality problems create disruption

 supporting goals
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1. Small lot sizes
lean services

introduction
2. Setup time reduction
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3. Manufacturing cells
4. Limited work in process
5. Quality improvement
6. Production flexibility
7. Little inventory storage
SMALL LOT SIZES

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• in-process inventory is considerably less
• inspection and rework costs are less
• less storage space
• greater flexibility in scheduling
SETUP TIME REDUCTION
• single-minute exchange of die (SMED)

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▪ system for reducing changeover time
▪ categorizing changeover activities: internal or external
▪ convert as many internal activities as possible to external
activities and then streamline the remaining internal
activities
MANUFACTURING CELLS
• cells contain the machines and tools

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needed to process families of
parts having similar processing
requirements
• highly specialized and efficient
production centers
• Benefits: reduced changeover times
and high utilization of equipment
building blocks
QUALITY IMPROVEMENT
• finding and eliminating the causes of problems

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• autonomation
▪ Jidoka
▪ involves the automatic detection of defects
▪ two mechanisms: one for detecting defects when they
occur and another for a human stopping production
to correct the cause of the defects
PRODUCTION FLEXIBILITY

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• Reduce downtime by reducing changeover time
• Use preventive maintenance to reduce breakdowns
• Cross-train workers to help clear bottlenecks
• Use many small units of capacity
• Reserve capacity for important customers
BALANCED SYSTEM

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• Helps to achieve rapid flow of work through the
system
• Time assigned to each workstation < = cycle time

• Takt time: cycle time needed to match the pace

of production to the demand rate
TAKT TIME
1. Determine the net time available per shift by subtracting any

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non-productive time from total shift time.
2. If there is more than one shift per day, multiply the net time
per shift by the number of shifts to obtain the net available
time per day.
3. Compute takt time by dividing the net available time by
demand.
TAKT TIME SAMPLE PROBLEM

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Total time per shift is 480 minutes per day, and there are
two shifts per day. There are two 20-minute rest breaks
and a 30-minute lunch break per shift. Daily demand is
80 units.
TAKT TIME SAMPLE PROBLEM
Compute net time Compute the net time

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available per shift available per day Compute takt time

410/shift x 2 shifts/day = = Net time available per day

820 min. per day Daily demand
= 820 min/day
80 units/day
= 10.25/cycle
Exercise 1

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Compute the takt time for a system where the total time per
shift is 480 minutes, there is one shift, and workers are given
two 15-minute breaks and 45 minutes for lunch. Daily
demand is 300 units.

Answer: 1.35

Solution: 480 - 30 - 45 = 405/300 = 1.35

Exercise 2

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Compute the takt time for a service system that intended to
perform a standardized service. The system will have a total
work time of 440 minutes per day, two 10-minute breaks, and
an hour for lunch. The service system must process 90 jobs a
day.

Answer: 4 minutes

Solution: 440 - 20 – 60 = 360/90 = 4 mins

Case Focus
Island Charm Operations, a small company located near Botolan in Zambales’ Radiance
Electronics, produces a variety of security devices and safes. The safes come in several

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different designs. Recently, a number of new customers have placed orders, and the
production facility has been enlarged to accommodate the increased demand. Production
manager Minamotosan is working on a production plan for the safes. She needs a plan for
each day of the week. She has obtained the following information from the marketing
department on projected demand for the next five weeks:

The department operates five days a week. One complexity is that partially completed safes
are not permitted; each cycle must produce finished units.

After discussions with engineering, Minamoto-san determined that the best production
sequence for each cycle is S7–S8–S9–S1–S2.

Question
What might Minamoto-san determine as the best production quantity per cycle for each day of
the week ?
LITTLE INVENTORY STORAGE
• result of a process of successful problem

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solving
• less carrying cost
• less space needed
• less tendency to rely on buffers
• less rework if defects occur
FAIL-SAFE METHODS
• building safeguards into a process to reduce or eliminate the

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potential for errors
• Examples:
▪ in vehicles, including signals
▪ ATM signal
▪ detectors at department stores
▪ electrical fuses and circuit
▪ computers and other devices’ password
 supporting goals
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1. Workers as assets
lean services

introduction
2. Cross-trained
lean tools
transition

workers
3. Continuous
improvement
4. Cost accounting
5. Leadership/project
management
WORKERS AS ASSETS

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• heart of a lean system
• given more authority to make decisions
• economic benefits
• higher market values on average than their industry peers
CROSS-TRAINED WORKERS
•

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perform several parts of a process
• operate a variety of machines
• system flexibility
• line balancing
CONTINUOS IMPROVEMENT

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• reducing inventories
• reducing setup cost and time
• improving quality
• increasing the output rate
• generally cutting waste and inefficiency
COST ACCOUNTING

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• activity-based costing
▪ reflect the actual amount of overhead consumed by a
particular job or activity
▪ Activity-based costing

1. Identifies traceable costs

2. Assigns those costs to various types of activities
3. Specific jobs are then assigned overhead based on the
percentage of activities they consume
LEADERSHIP/ PROJECT MANAGEMENT

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• Managers are expected to be
leaders and facilitators, not
order givers
• Two-way communication
between workers and
managers
 supporting goals
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1. Level loading
lean services

introduction
2. Pull systems
lean tools

3. Visual systems
transition

4. Close vendor
relationships
5. Reduced transaction
processing
6. Preventive
maintenance
LEVEL CAPACITY LOADING

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• strong emphasis on achieving stable, level daily mix
schedules
• develop master production schedule
• smooth demand for suppliers
• Mixed-model sequencing (e.g. producing 3 models –
A, B, C)
LEVEL LOADING

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setup time or cost
LEVEL LOADING
EXAMPLE 2

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Determine a production plan for these
three models using the sequence A-B-C:
LEVEL LOADING

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If the requirement for model A had been 8 units a day instead of 7, the
manager might decide to use the following pattern:
PULL SYSTEMS

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• moving work where a workstation pulls
output from the preceding station as needed

• output of the final operation is pulled by

customer demand or the master schedule
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VISUAL SYSTEM
• Kanban: Card or other device that communicates

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demand for work or materials from the preceding
station
• Kanban, “signal” or “visible record”
• Paperless production control system
• Authority to pull, or produce comes from a downstream
process
Kanban
1. User removes a

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standard sized
container
2. Signal is seen by
the producing
department as
authorization to
replenish
Signal marker
on boxes

Part numbers
mark location
Kanban Computation
DT(1+X)

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N= __________
C
where
N = Total number of containers (1 card per container)
D = Planned usage rate of using work center
T = Average waiting time for replenishment of parts plus average
production time for a container of parts
X = Policy variable set by management that reflects possible inefficiency in
the system (the closer to 0, the more efficient the system)
C = Capacity of a standard container (should be no more than 10 percent
of daily usage of the part)
Kanban Exercise 1
Usage at a work center is 300 parts per day, and a standard container

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holds 25 parts. It takes an average of .12 day for a container to
complete a circuit from the time a kanban card is received until the
container is returned empty. Compute the number of kanban cards
(containers) needed if X = .20.
CLOSE VENDOR RELATIONSHIPS
• TRADITIONAL SUPPLIER STRUCTURE

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Buyer
Supplier Supplier
Supplier

Supplier Supplier Supplier Supplier

SUPPLIER TIERS
• TIERED

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Buyer

First Tier Supplier Supplier

Second Tier Supplier Supplier Supplier

Third Tier Supplier Supplier Supplier Supplier Supplier

REDUCED TRANSACTION PROCESSING

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• reducing the number and frequency of transactions
• examples
▪ suppliers deliver goods directly to the production floor
▪ vendors are certified for quality
PREVENTIVE MAINTENANCE

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• maintaining equipment in good operating condition
• replacing parts that have a tendency to fail before
they fail
• 5S Housekeeping
PREVENTIVE MAINTENANCE

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SELF-DISCIPLINE
 VALUE STREAM MAPPING

supporting goals
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introduction
lean services

• visual tool to systematically examine the

lean tools
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flow of materials and information

• help identifies waste and opportunities for

improvement
 VALUE STREAM MAPPING

supporting goals
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lean services

1. Map the value stream in person

introduction
lean tools
transition

2. Begin with a quick walk through of the system

from beginning to end
3. Do a more thorough walkthrough following the
actual flow to collect current information on
material or information flow
4. Record elements of time such as cycle times,
scrap rates, amount of inventory, downtime,
distances traveled and so on.
 lean services
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5W2H

lean tools
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supporting goals
introduction
 LEAN AND SIX SIGMA

supporting goals
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lean services

introduction
• complementary approaches to process

lean tools
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improvement
• Lean focuses on eliminating non-value-added
activity to maximize process velocity
• Six Sigma seeks to eliminate process
variation
 TRANSITIONING TO
LEAN SYSYTEM

supporting goals
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lean services

introduction
transition
• Make sure top management is committed to the

lean tools
conversion and that they know what will be
required
• Study the operations carefully; decide which
parts will need the most effort to convert.
• Obtain the support and cooperation of workers
 TRANSITIONING TO
LEAN SYSYTEM

supporting goals
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lean services

introduction
transition
• Begin by trying to reduce setup times while

lean tools
maintaining the current system
• Gradually convert operations, begin at the end of
the process and work backward
• Convert suppliers to JIT
• Prepare for obstacles
 OBSTACLES FOR CONVERSION

supporting goals
building blocks
lean services

introduction
• Impartial commitment by management

transition
lean tools
• Workers and/or management may not be
cooperative
• Difficult to change the culture
• Resistance of suppliers
LEAN SERVICES

supporting goals
building blocks
lean services

introduction
• Eliminate disruptions

transition
lean tools
• Make the system flexible
• Reduce setup times and processing times
• Eliminate waste
• Minimize work-in-process
• Simplify the process
OPERATIONS STRATEGY

supporting goals
operations strategy

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• careful estimates of time and cost to convert

introduction
transition
•

lean tools
workers, managers, and suppliers cooperation
• level production schedule
• weigh the risks and benefits
• supplier management
• leadership commitment, involvement, and
support
• lean thinking “culture”
• effective teamwork
 final thought
transition
lean tools
building blocks
supporting goals
introduction